State's financial crisis could cut off funding

The Metropolitan Transportation Authority and other agencies could run out of money to complete the San Fernando Valley's Orange Line bus extension and the 405 Freeway widening project because of the state's budget crisis, officials are warning.

The future of those two projects, along with the first phase of building the Expo light-rail line, relies on the sale of state bonds that were approved by voters in 2006.

But Gov. Jerry Brown and state lawmakers already have canceled one round of bond sales scheduled for this spring and L.A. County officials fear that another round planned for the fall could be put on hold, too, if a series of state tax extensions are not approved by voters this year.

Together the two bond sales would have provided about $573 million to L.A. County.

"We have three projects which are at risk right now," Metro CEO Art Leahy said during a recent strategy session with transit officials.

"One is the 405. It's not at imminent risk, but at some point, if (state) bonds aren't sold, we're going to have to think about demobilizing that project."

California voters in 2006 approved Proposition 1B, mandating the state to sell $19.925 billion in bonds to finance transportation projects across the state. Of that, $5.32 billion was slated for Los Angeles County, with an installment of $173 million due this spring.

Some county projects have already started with earlier rounds of bond sales or other sources, but will have trouble reaching completion if the additional expected financing does not come through.

David Yale, Metro's deputy executive officer of regional planning, said the county could lose another $400 million if the fall bond sale is canceled.

"We are five years into the (construction) program," Yale said. "At this peak period, we would have expected the program to be providing the peak amount of funding. But what's happened with the state is that one of the ways they're closing the deficit is deferring bond sales."

Gov. Jerry Brown's Department of Finance expressed hope that the fall bond sale will continue as planned, but said it was scheduled with the assumption that California voters would approve a series of more than $12 billion in tax extensions. With negotiations in Sacramento breaking down, the measures are now not going on the June ballot, but have been pushed back to fall, casting more doubt on the fate of the bond sales.

Metro was supposed to get the largest chunk of the bond money to build a long list of transit projects, including $1billion to add a car-pool lane on the 405 between the 10 and 101 freeways. Work began in early 2010, and is supposed to be completed by 2013.

Metro is also extending the Orange Line busway between Canoga Park and Chatsworth - a $216 million project scheduled for completion by mid-2012. Officials say while completion of the project is threatened by the canceled bond sales, they would likely shift funds around to ensure completion of the project because it is so far along in the work.

Metro will also own and operate the Expo Line - a light-rail system connecting downtown Los Angeles with the Westside and Culver City - once the Exposition Construction Authority completes work on the $930 million project.

"Los Angeles is a huge economic engine for the state, and to have that engine running rough because mobility is impaired is not a smart move," Yale said, pointing out that every $1 billion spent on transportation projects generates an estimated 18,000 jobs.

Leahy said he would urge Metro's board of directors to proceed with projects that are already under construction by diverting funds from projects that have yet to break ground, and by trying to identify other sources of revenue.

"It's limited. We can't do everything," Leahy said. "All we would do is try to figure out which projects are furthest along and which can we keep moving, and which projects we cannot keep moving."

Yale estimated there is enough money to continue work on the 405 for at least another year. He said construction could be suspended, however, if the state cancels another bond sale.

On the Orange Line, Yale said, "This is a project that's very nearly done and it's unlikely that we would incur - if we could avoid it - the cost of buttoning it up and stopping construction. It's more than likely we'll defer something else first."

Another project due to receive bond money from the state this year is installing "positive train control," a safety measure that tracks the speed and location of trains, and takes over the controls when necessary to prevent collisions and derailments.

It became mandatory for rail systems nationwide after the Chatsworth Metrolink train crash in 2008 that killed 25 people and injured 135.

Metrolink chief executive officer John Fenton said positive train control is not in immediate danger of a shutdown, but added, "If we do not get something done by February 2012, PTC will be impacted by $32 million. That would be a real problem to demobilize the PTC project if we couldn't come up with the funding."

Leahy called on state officials to fulfill the voters' mandate.

"Voters have voted for these projects," he said. "They voted to approve the funding for them, and they have a reasonable expectation that the state is going to carry out that pledge.

"If someone reflects on the economic impact of these investments, as well as the transportation and air quality benefits, it is a no-brainer to keep these projects moving," he added.